Unusual Options Activity: Petroleo Brasileiro (PBR)

Oil giant Petroleo Brasileiro (PBR) has had a strong year, with shares rallying nearly 60 percent. One trader sees further upside ahead for shares.

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  • That’s based on the June 2024 $10 calls. With 209 days until expiration, 10,016 contracts traded compared to a prior open interest of 303, for a 33-fold increase in volume on the trade. The buyer of the calls paid $5.95 to make the bullish bet.

    Shares recently traded for about $15.85, making this option about $5.80 in-the-money, and leaving very little time premium on an option with over six months to play out.

    PBR shares are trending higher, and nearing their 52-week high of $16.55.

    Even with a big rally this year, shares trade at about 6 times earnings. Operationally, it’s been a more challenging year, with revenues down by a quarter and earnings dropping by over 40 percent.

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  • Action to take: With oil prices trending down right now, interested investors may want to wait for the trend to end. Petrobras pays a dividend based on its earnings, and has had some high payouts in recent years.

    For traders, the June 2024 calls look interesting. Being deep in-the-money, they can likely see mid-double-digit gains before expiration. Traders may want to take profits if shares near their 52-week highs.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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